NZX wishes to advise that the Preliminary Full Year Results for SDL for the
year ended 30 June 2008 is being re-released as the original announcement
omitted the text intended to follow the section titled "2009 Outlook".
Announcement 12 September 2008
Solution Dynamics Shows Continuing Improvement
2007-2008 Highlights
Deficit of $253,000 shows solid improvement over the prior year deficit of
$536,000
Operating revenue increased by 12.6% to $10.5 million
240% increase in Dejar license sales
EBITDA up by 94% to $722,000
New colour imaging service successfully introduced
Operating cash up by 170% to $806,000
Successful capital raising completed in first quarter of 2009 with $600,000
placement followed by a Share Purchase Plan. 17.5% of shareholders
participated raising a further $157,622
The results for the year to 30 June 2008 show the improvement in earnings
performance that was signalled last year. The board and management are
pleased with the progress that has been made this year, With the Dejar
product we achieved strong growth in sales and earnings. In the core Image
and Mail business we acquired significant new accounts and increased our
market share. However, overall, we had been striving for a better financial
outcome than the deficit of $253,000 delivered and are confidently targeting
a return to profitability in the 2009 year.
Strategic Focus
In the 2007 Annual Report we outlined our strategic goals for the 2008 year
and we have made significant progress against these;
1. Identify strategic alliances, merger and acquisition opportunities
that complement our core business.
The relationship with Printsoft, our main Dejar channel partner, got off to
an excellent start in the 2008 year with license sales of approximately
NZ$1.0 million for the year and earnings of $407,000. This gave rise to an
increase in Dejar revenues, including recurring maintenance and bureau
service revenues, of 154%. While some acquisition and merger opportunities
were reviewed during the year, none of these met our criteria and none
proceeded beyond initial discussions.
2. Secure new business and retain the existing customer base.
Outside of Dejar license sales noted above, we have also grown the customer
base in Imaging and Mail services during the year. This is reflected in the
5% growth in New Zealand sales revenues and further new business of more than
$500,000 per anum has been has been confirmed for commencement in the 2009
year..
3. Complete the implementation of the production platform upgrade.
The rationalisation of the imaging platform, including the introduction of
colour capability was completed in Q4 2007. The new intelligent inserter was
installed in Q1 2008 and is operating to expectations.
Extend the product and service offering.
This has been very successful with a number of our customers transitioning to
our new colour laser imaging platform. Enhancements to Dejar and the beta
release of v.3 were also completed during the year.. Then we started a
programme in Q4 2008 to enhance the scanning business'' capabilities.
One key area where we are re-thinking our approach is the Desk Top Mail
product where uptake has been slower than expected and we are currently
assessing fresh opportunities in this exciting area.
Hold down costs & improve efficiencies.
The transitioning of the sales force, upgrading of operational skill sets and
inflationary factors contributed towards the cost increases during last year.
We have been able to partially offset these by savings gained through process
improvement efficiencies. In the mailing business in particular we have made
good progress with production efficiencies.
A substantial investment has also been made in Dejar in terms of market
support costs and staffing.
Financial Results & Cash Flow
On 13 June 2008 SDL announced a proposal to raise capital to strengthen the
balance sheet, support development of Dejar and to take advantage of the
sales opportunities available to the company. This announcement included
guidance on the 2008 year result indicating a likely loss of $260,000 on an
increase in sales of approximately 11.5%. Actual sales for the year were
$10,563,000, 12.6% higher than the previous year and the loss was $253,000.
The final result varies from the announcement in the level of EBITDA,
indicated to be approximately $570,000 against an actual of $722,000. This
difference arises due to the accounting treatment of the lease for the
inserting equipment installed in July 2007. We had been treating the purchase
agreement as an operating lease. The auditors considered that the terms of
the lease effectively gave us ownership rights and so the equipment came on
to the books as an asset, depreciation was charged and the lease cost
reduced. This reclassification has also had an impact on the level of
external debt which was expected to fall 10% ($165,000) to $1.5 million. It
has risen by $90,000 to $1.712 million, a difference of $212,000. The
finance lease relating to this equipment has a value of $470,104 at 30 June
2008.
Cash flows for the year were substantially stronger than the previous year
with cash from operations at $806,000 (2007: $299,000) 170% up on the prior
year. The current portion of debt at $1.041 million (2007: $1,023 million)
is slightly higher than the previous year. We invested $895,000 in new plant,
including the inserting equipment noted above and that is why total debt
remained similar to last year.
The cash raising post balance date, applied to the balance sheet as at June
30 2008 would have had the effect of increasing shareholder''s funds from
$466,000 to approximately [$1,170,000] and reduced interest bearing debt from
$1,712,000 to $1,010,000.
2009 Outlook
The strategy is proving to be effective. We are not moving as quickly as we
would like, but steady progress is being made and we are budgeting for a
profit in the coming year;
Actual 2007 Actual 2008 Outlook 2009
Sales 9385 10563 11100
Earnings before interest, tax & amortisation
373 722 1,100
Net profit (deficit) after tax
(536) (253) 400
We note that the group has tax losses of $1.186 million available to it that
are not classified as an asset in the balance sheet.
If achieved this budgeted result will similarly improve the strength of our
balance sheet and moves us closer to a position where it will be possible to
commence paying dividends to shareholders.
For further information please contact:
Chairman, Maurice Kidd on Mobile 021 905 977
Chief Executive Officer, Nelson Siva on mobile 021 415027
End CA:00170046 For:SDL Type:FLLYR Time:2008-09-12:17:29:13